Your Queries: Loans – banks will charge interest for 3-month moratorium period

March 31, 2020 1:45 AM

The moratorium means in case of cash crunch in these extraordinary times, you may not pay the EMIs but the bank/FI will not classify your loan as a non-performing asset (NPA).

Each bank/FI will come out with their own process details. Be in touch with your institution if you want to avail of this facility. Each bank/FI will come out with their own process details. Be in touch with your institution if you want to avail of this facility.

By Chaitali Dutta

As the RBI has put a three-month moratorium on loan repayment, will banks charge interest on the loan for the period and do I have to inform the bank about the moratorium?
—Kaushik Rai
The RBI has issued clarifications on this. Yes, interest will be charged for these three months. The moratorium means in case of cash crunch in these extraordinary times, you may not pay the EMIs but the bank/FI will not classify your loan as a non-performing asset (NPA). Your loan period will get extended accordingly. Under regular times after an amount becomes overdue for 90 days your loan is considered NPA and your credit score are affected. Each bank/FI will come out with their own process details. Be in touch with your institution if you want to avail of this facility. If you can afford all or part of these EMIs, suggest that you make those payments. This will reduce your interest burden.

I pay my credit card dues via cheque. As I will not be able to go out to deposit the cheque till April 15, will the bank refer my case to a credit bureau?
—Rajeev Das
The RBI has clarified that credit card dues for payment between March 1, 2020 to May 31, 2020 will have benefit of moratorium announced. While your credit score will not get affected, interest will be applied to this overdue amount which could be as high as 30-35% pa.

I have some spare money with me. Do I have to pay any penalty for prepaying my car loan?
—Shishir Saxena
There is usually a clause in the car loan agreement which does not allow for additional part payment/ full closure in the first few years. This varies from bank to bank. Take a detailed look at your agreement. It would be beneficial to pay off the car loan with your surplus funds.

Is it mandatory to give copies of ITR forms for a home loan as I have not filed ITR for the past five years?
—DKMishra
Yes, income proof by way of ITRs is mandatory for a home loan. This is done to ensure that the applicant has a steady source of income so that he/she will be in a position to repay the loan. Start filing the income tax returns immediately. You may be able to file 2018-19 ITR as well now with a penalty payment. Once you have three consecutive ITRs on record, you may apply for the home loan.

The writer is founder, AZUKE Personal Finance Advisory (www.azukefinance.com).
Send your queries to fepersonalfinance@expressindia.com

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